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    CarMax (KMX) Faces A 3% Fair Value Gap After Earnings And Leadership Moves

    Simply Wall St·10/02/2026 03:30:37
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    CarMax (KMX) has just paired a strong earnings release with fresh leadership moves. This gives investors new information on both current performance and how management wants to shape the business.

    Over the past year, CarMax has paired a 42.25% year to date share price return with a 21.32% one year total shareholder return, while the 5 year total shareholder return is down 57.45%. This combination points to strong recent momentum following a much tougher longer stretch.

    Compare CarMax's rebound with other potential used car and consumer auto plays by scanning our hand picked 28 high quality undervalued stocks that pair balance sheet strength with earnings power.

    CarMax now has earnings momentum, fresh leadership and a clear growth plan. The open question is whether that mix is already fully reflected in the current share price.

    Most Popular Narrative: 3% Overvalued

    CarMax closed at $55.89, while the most followed narrative fair value sits at $54.09, so the story being told in the data is that investors are paying a small premium for the current recovery plan.

    The yardstick Barr set for this work in June, “progress will be measured by our ability to grow penetration,” moves the other way. Penetration reads 40.9% against 42.6% a year ago, and 43.3% the last time it was reported. Daniels: “Despite this growth in Tier 2, overall CAF penetration declined year-over-year.” He frames it as “a normal response to the higher interest rate environment”; Barr, in the Q&A, frames the same outcome as a choice: “we chose to raise rates.” The Tier 2 statistic that carries the progress language also reads lower. CAF is “financing 22% of Tier 2 volume as compared to 10% a year ago,” where the earlier figure was “upwards of 25%” against the same 10% base, unless the measure was defined differently. The same remarks say “We continue to make meaningful progress expanding across the credit spectrum.”

    See why 1 investors see CarMax as 3% overvalued.

    Result: Fair Value of $54.09 (OVERVALUED)

    Still, the CarMax narrative could be knocked off course if CAF penetration keeps slipping, or if SG&A savings and warranty changes disappoint customers.

    Find out about the key risks to this CarMax narrative.

    Next Steps

    Conflicted by CarMax's mix of risks and rewards in this earnings story? Act quickly, review both sides of the ledger, and study the 1 key reward and 3 important warning signs.

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    This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.